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April 25, 1989


The opinion of the court was delivered by: VAN ANTWERPEN


 This non-jury matter is a suit by plaintiff for damages under a charter agreement for the vessel, Magic. Defendant has counterclaimed claiming certain deficiencies in the vessel. The plaintiff has brought suit based upon the diversity jurisdiction of this court. 28 U.S.C.A. § 1332(a) (West Supp. 1988). There has been no demand for a jury trial. From the hearings on March 27 through March 30, 1989, we make the following findings of fact and conclusions of law, pursuant to Fed.R.Civ.P. 52(a).

 1. The plaintiff, Compass Marine Corporation ("Compass"), was incorporated in Pennsylvania in 1975. The company's main office is in Wilmington, Delaware, and it does business at Chester, Pennsylvania.

 2. The defendant, Calore Rigging Company ("Calore"), is a Rhode Island corporation having been incorporated in Rhode Island. The company's main office is in North Kingston, Rhode Island. The president of Calore is Joseph Calore. Calore has about 12 years of marine experience and, prior to that, it made use of outside boats and crews for its marine operations.

 3. Compass is in the marine towing business and is the owner of a number of vessels, including a motor vessel, commonly called a tug, named Magic. Magic was acquired in 1982 and fitted with new engines and a Texas bar for towing. She had a 1800 foot, 1 1/2 inch stern towing hawser. On May 19, 1986, Magic had a value of approximately $ 1,500,000 and the vessel is registered with the United States Coast Guard for towing. She was rigged to tow one barge at a time. The Texas bar is an antichafing device and would require a second pulley to tow two barges.

 4. In early 1986, a strike of approximately 40 days effectively shut down Compass and it actively sought funds from charters to pay the debt service on its vessels. It also sought charters to remove the vessels from possible vandalism.

 5. In offices of plaintiff in Chester, Pennsylvania on May 19, 1986, the parties Compass and Calore, through authorized officers, signed a month-to-month charter agreement (Plaintiff Exhibit #1) for the tug Magic. The form agreement was provided by Compass. Under the terms of the agreement, the charter was for a minimum of four months and, as charterer, Calore was not to operate Magic in any waters other than those for which the vessel was insured by the charterer. The charter hire charge was $ 750 per day.

 6. According to the agreement, insurance was to have been provided by Calore; however, a separate agreement as to insurance was reached by the parties under which Compass was to obtain insurance and bill Calore for it until Calore could obtain coverage.

 7. The charter agreement provided that Calore would maintain the vessel in "good condition, ordinary wear and tear excepted", and that Calore "shall not permit the vessel to deteriorate" to an extent that it is not seaworthy. Calore was to provide and pay the crew and also pay for fuel, use taxes, and repairs. When the vessel was returned, fuel and lubrication oil were to be at the same level as when it was hired. The amount of fuel and lubrication oil on hand at hire was set forth in an addendum to the charter agreement.

 8. Officers of Compass were not fully informed of the use that would be made of Magic. The existing insurance coverage did not extend to the St. Lawrence Seaway. Officers of Compass were aware that, at some point, Magic would be taken to New York and then through the Panama Canal to California, but they did not know that Magic first had to go through the St. Lawrence Seaway and Great Lakes to Michigan to pick up barges.

 9. At the time of the charter, a survey was conducted with Magic out of the water. In general, the survey showed Magic to be in good condition, with the exception of the deck paint, which was only fair, although all surfaces were covered. The air conditioning unit worked properly at this time. There was a problem with a keel cooler and Compass agreed to a deduction of $ 3446 from the hiring invoices. The vessel was seaworthy.

 10. Plaintiff's Exhibits P-32 through P-39 are photographs which show the hull rudder, and propellers of the vessel at the time of the May 19, 1986 survey. Compass knew that the low speed on the towing cable winch did not work but did not inform Calore nor did it inform Calore that the fuel transfer pump would heat up after being run for 15 minutes. Operations were ...

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